Campaign to reduce student loan debt

New Orleans When I was in Columbus, Ohio a couple of weeks ago, I was stunned when an organizing colleague, Barbara Clark, told me that 75% of the 300 or so tax returns she had helped do at a VITA site at the Neighborhood House had student loan debts that were severe enough in some cases to divert their tax refunds directly to the lenders.  I had been even more shocked not long ago to find out that student loans can be deducted from social security payments of all things.  From the stories that Barbara shared, these were not young folks just out of school but often men and women in their late 40’s and 50’s who were being crushed by student loans.   There’s a campaign out there waiting to be organized.

A Wall Street Journal article yesterday gave some broad hints about some new provisions that have been enacted to provide some debt relief, and quoted a number of sources tearing their hair that information is not getting there to people so that they can access and take advantage of these breaks.  Hello, campaign calling!

In 2007 Congress passed a Act that allowed people in “public service”  jobs to get debt relief or forgiveness after ten years of working in such public service.  Looking it up this morning, it turns out that qualifying jobs are anything with the government or with employment by a 501c3 tax exempt non-profit organization.   The student loans need to be federal loans like Sallie Mae and the like, rather than something owed to the college or a bank obviously.  Last year in the middle of the meltdown, Congress extended the application of these forgiveness and write down provisions to include folks whose income was less than the level of their loan (ie, if you owe $50 grand and are only making $30000), which would mandate a maximum loan level.   The cap on payments is between 10 and 15% of your income and after 25 years any remaining principal and interest is written off.  That’s for everyone now.

Of course there are a lot of bells and whistles, details and drumbeats, but you get the picture.  There’s some “rules and rights” embedded here, and people are not getting them.  Perfect organizing opportunity for advocates and actions!

We need to go old school organizing and start making out a form!

Facebooktwittergoogle_plusredditpinterestlinkedinmail

6 thoughts on “Campaign to reduce student loan debt

  1.  The only problem with the debt forgiveness part is that in order to qualify you must not be in default.  It doesn’t make sense but it’s there.  Get rid of the default restriction.

  2. it would be nice to know who to contact to get unbiased help in figuring this all out.

  3. exactly, many of us are in default bc there were no other options, Sallie Mae wanted their 2000/ mo (more than I made) and if I didn’t pay that all well! Now it’s 6000/mo bc I couldn’t pay the 2000 (where does that make sense?)

  4. The campaign is organized and has been going for several years. Try these sites: http://studentloanjustice.org/  or  http://www.forgivestudentloandebt.com/

    And there’s even a documentary that hopefully will be shown on PBS sometime this fall  http://www.defaultmovie.com/

    As for student loan corporations seizing tax returns, they’ve been doing it for years. I had a friend — single mother of one — who worked two jobs (65 hrs/wk). One of her paychecks went to daycare and the other to living expenses. She had taken out a teeny-tiny loan of $1,000 in 1985 while briefly attending a community college. Flash forward to 1989-1990 and the loan had ballooned to over $3000 with interest and “fees”. She counted on her annual tax refund to pay off any outstanding bills (car payments, home insurance) and then Sallie Mae seized her refund, three years in a row.

    Predatory student loans are like a A.R.M. housing loan with the foreclosed home.

  5. Both IBR, and Public Service
    forgiveness programs have merit for relatively young borrowers (i.e.
    still in school, or recent graduates) who take on a large amount of
    debt, and earn low wages…particularly those who work in the public
    sector.  However, it is not the “be-all, end-all”, and certainly doesn’t
    substitute for standard consumer protections.  In fact, there are some
    very serious risks and adversities associated with these programs that
    need to be considered seriously:

     For borrowers with high debt/low income taking part
    in the programs, their balance will increase significantly during the
    life of the loan.  This will impact their debt/income ratio, and in
    general will weigh increasingly heavily on the mind of the borrower.
     If for whatever reason the borrower drops out of the
    program- particularly towards the end of the term- , they will be hit
    with this extremely large debt.  If they were to default, then this
    would be an astronomical amount.
     If the borrower should experience financial fortune
    during this period (particularly towards the end of the period), the
    borrower will be compelled to use it as a part of the IBR…so in a
    sense, it essentially guarantees financial medicority through the life
    of the repayment.  This tends to dampen ones ambition, and desire to
    take risks.
     For borrowers already saddled with defaulted loans
    that are massively inflated with fees and interest above the original
    amount borrowed, these programs are not attractive.  Both would force
    defaulted borrowers to “rehabilitate” their loans, which requires
    signing a new promissory note that legitimizes the vastly inflated debt.
     Many defaulted borrowers have already paid far more than originally
    borrowed, and these programs do nothing to address that.  Also, many
    defaulted borrowers have- for years-  already suffered massive losses-
    monetary and non monetary, and the thought of a 10, or 25 year repayment
    program is not only unpleasant; in the absence of standard consumer
    protections that would allow for a relatively swift and straightforward
    resolution (like for IRS debt, credit card debt, or any other type of
    debt), these programs are, frankly, insulting.  Particularly for older
    borrowers who look forward a time in their life without the stress
    associated with intractable student loan debt.
     10 years is a long time.  25 years is an eternity.
     Congress took away bankruptcy protections from student loans
    mid-stream…one can imagine the multitude of ways that this program
    could be tweaked over time to benefit the Feds as opposed to the
    borrowers.  501(c)(3) status could be revoked en masse at some point.
    the poverty level could be dramatically changed, etc, etc.  These and
    many other factors could make the program fail, or greatly reduce its
    attractiveness over the life of the loan.
    Couple of general thoughts:

     In general, all of this discussion only begs the
    question:  Why is college so expensive that we need these programs in
    the first place?  
     These programs smack of population control…sort of
    a “soft, involuntary servitude”.  The citizens have no control over the
    cost of education, and little control over how much they have to
    borrower to get through school, so many are locked into decades of
    lifestyle choices dictated greatly by this debt…This is a damper on
    happiness, freedom, self determination, and a new stress on a large
    segment of the population that could be easily avoided with rational
    pricing, and standard consumer protections.  
    We must not lose sight of the fact that given the public benefit of
    education, student loans should have more consumer protections than
    other loans.  Not less.

     These programs will, as a practical matter, serve as
    an excuse for Congress not to return much needed consumer protections
    to the student loan industry.  This will only guaranty the perpetuation
    of horrible lending practices, bad oversite,  continued inflation,
    increased debt, and a host of other systemic flaws that need to be
    addressed immediately. 

  6. The problem is that bankruptcy and other standard consumer protections were taken away from student loans, and the lending system turned predatory, inflationary, and corrupted the oversight. 

    So stop telling the public to organize around spreading the word about repayment programs.  These do not solve the problem.  Returning AT A MINIMUM, standard bankruptcy protections to realign the lender’s interests with the borrower’s interests is the only solution, short of simply writing off all student loan debt…

    The sooner the citizens realize this, and quit listening to sideways talk from apologists who don’t want to tackle the real problem, the sooner we can get this system working as it should…for the students, not against them.

    I hope very much that Wade will come to studentloanjustice.org, and consider the facts that are plainly laid out there.  We need progressive groups like ACORN to be fighting with us.

Leave a Reply

Your email address will not be published. Required fields are marked *